Janet CollinsBudgets, Surpluses and Accounting Standards
June 5th 2008 03:23
When governments sprinkle their announcements with “working families” or insist they understand how things are on “struggle street”, I always feel a little bit patronised. I can almost feel them patting me on the head. When budget days come around, they speak in a very different language.
Take the NSW Government’s budget announcement this week for example. Rather than talk in terms of what we will have built or fixed this coming year, they colour it all with dollar values in the hundreds of billions. Just to choose one figure to make my point, $140 billion is to be committed to capital works over the next ten years. Figures, such as this one, mean absolutely nothing to the average punter like me. How many of us would even know the cost of a few metres of train track or a hospital bed or a school building?
Governments may think that using these extraordinary large sums in their announcements will give them a certain level of credibility but all most people want to know from a government is how the State’s services will be improved. Will there be provision for extra trains and buses to cater for the increased commuter numbers? Will hospital services be improved? Will enough be allocated to schools to pay for sufficient teachers or necessary building maintenance and extensions?
Costs go up all the time and the rise in the cost of providing these services is no different. A personal budget is a lot simpler but the principle is the still the same. If I was to look at my own budget, I can see quite clearly that petrol, food, interest rates, bus and train fares have all risen dearly this year. Without a doctorate in finance or economics, I can work out that even if I can find some really great clothes and shoes at bargain basement prices but I have nothing left to buy them with, I have two options – do without or put them on the credit card. The choice is not as easy when I need something more urgently repaired however, like plumbing.
The credit card option is not one that governments these days seem to want to choose. Budget surpluses, it seems, are an absolute must for governments to demonstrate their economic management credentials. So with much reserve, the NSW government admitted that this year its surplus would be small at $268 million, explaining that it was not the government’s financial management but new accounting standards that reduced the amount. Under last year’s accounting standards, the Treasurer explained, this figure would be equal to $737 million!
If I was to explain to friends that the reason I had much less left over this year than I had last year was only because I was using a different accounting standard, I am sure I would get more than a few laughs.
Take the NSW Government’s budget announcement this week for example. Rather than talk in terms of what we will have built or fixed this coming year, they colour it all with dollar values in the hundreds of billions. Just to choose one figure to make my point, $140 billion is to be committed to capital works over the next ten years. Figures, such as this one, mean absolutely nothing to the average punter like me. How many of us would even know the cost of a few metres of train track or a hospital bed or a school building?
Governments may think that using these extraordinary large sums in their announcements will give them a certain level of credibility but all most people want to know from a government is how the State’s services will be improved. Will there be provision for extra trains and buses to cater for the increased commuter numbers? Will hospital services be improved? Will enough be allocated to schools to pay for sufficient teachers or necessary building maintenance and extensions?
Costs go up all the time and the rise in the cost of providing these services is no different. A personal budget is a lot simpler but the principle is the still the same. If I was to look at my own budget, I can see quite clearly that petrol, food, interest rates, bus and train fares have all risen dearly this year. Without a doctorate in finance or economics, I can work out that even if I can find some really great clothes and shoes at bargain basement prices but I have nothing left to buy them with, I have two options – do without or put them on the credit card. The choice is not as easy when I need something more urgently repaired however, like plumbing.
The credit card option is not one that governments these days seem to want to choose. Budget surpluses, it seems, are an absolute must for governments to demonstrate their economic management credentials. So with much reserve, the NSW government admitted that this year its surplus would be small at $268 million, explaining that it was not the government’s financial management but new accounting standards that reduced the amount. Under last year’s accounting standards, the Treasurer explained, this figure would be equal to $737 million!
If I was to explain to friends that the reason I had much less left over this year than I had last year was only because I was using a different accounting standard, I am sure I would get more than a few laughs.
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